Asian Session Forex Trading
Table of Contents
To be in the foreign exchange business as a trader is involves a high level of risk and may not be suitable to all investor. The high degree of leverage can either be with you or against you. To consider an investment objective, level of experience and the risk of appetite is an important factor before you want to be involve in trading foreign exchange. In this business, you could experience losses and may wash out your initial investment. That is way it is important that you have to invest only a potion in which you can afford to lose. Be advised that you should be familiar of the risk factor with foreign exchange and may consult financial advisors if you are in doubt. This forex strategy does not require any Forex Indicators.
Why Trade Asian Session?
When you say forex market, you will be considering 3 trading sessions, these are the Asian, European, and US sessions. Mostly, the trading is done during European session. This trading system takes advantage of the fact that on most days the Asian session is quite calm compared to the European trading session.
Get To Know How To Trade The Asian Session
We need to draw a box around Asian session defined as 11PM GMT to 8 AM GMT. The first bar will appear at 11 PM and the last bar will be done by 8:00 am GMT. We will draw a box around the one hour bars during this time and include the highest and lowest point of this time in our box.
We will look at only one currency pair and this is the EURUSD. EURUSD is one of the most traded currency pair in the forex market and its volatility is good. You can also test this method in any pairs you like as it works also in all currency pairs.
The EURUSD follows a restricted trading pattern during the Asian session and in European session, we will see the pair makes a violent move in one direction.
In this chart, you can observe that from 11:00pm – 08:00am GMT, the EUR/USD has traded within the blue box. This is the box that we draw every day on the one hour chart time frame.
Don’t take any trade of that day if the range of the box exceeds 150 pips. However, if the box has a range of 150 pips or less, we will look to take a trade once the market trades and closes outside of the box, either higher than the Asian session high or lower than the Asian session low.
There is a big move when the European session begins trading, but it will close back down. You can see quick move upward of the EURUSD during the first trading hour during the European session, despite of sideway movement during Asian session.
This is the fake out bar and try to avoid the trap of this.
The Fake Out Bar
We can be deceived by taking a trade here but if we wait for the market to trade and close higher or lower than our box, then we can avoid this fake out bar.
Let’s look at an example:
Sell trade taken on this bar since the bar closes lower than the box.
Here we see that the market has traded and closed lower than our box, so we enter a sell trade.
We place our stop loss at the high of the box.
Our Stop Loss is placed at the high of the box.
The target profit is the same distance as the range of our box. In this case our box range is of 30 pips. Therefore, we would place our profit target 30 pips from our entry point.
Range of the box (30 pips)
Entry Point Profit Target
In this case, the profit target would have been achieved for +30 pips. Also, as you can see, this day the market pushed down even further and we could have been able to max out our profits.
To do it safely and proper, it is recommended to open two positions, close one position at profit target, move the stop loss to the entry point and let the second position run for another 30 pips from the profit target for a total of 60 pips.
The 2 profit targets would have been achieved for a total of +60 pips that day.
Here is another example: This is the box the next day.
Don’t take the trade. This box, at 159 pips, it is too big.
In this case, there is no possible trade that day. The rule of the 150 pips range box did indicate us to stay out of the market. Let’s have a look now at another fake out bar, where our method keeps us out of the market and avoid a potential loss.
A couple of days later, we see a small box of 25 pips, and a sell signal is triggered.
The profit target of 25 pips was hit the next day, 24 hours after the trade was taken. We took an additional sell trade on the current day’s signal.
That additional trade will last another 24 hours before we can close it bagging +35 pips, and we will add another trade that will be closed for an additional +33 pips the very same day.
Trading Asian Session Conclusion
The Asian Session Forex Trading Strategy is a profitable one and is able to give you consistent profits every day. It is recommended to stick to the rules and do not trade with your emotions. Discipline and consistency is needed to be a good trader, and come out profitable over all.
It is also encourage that you will look at different rules if you think there is a better way to trade the Asian Session. Let’s say for example you decide to exit the trade after the market closes back inside the box rather than waiting for the market to hit your stop loss at the midpoint of the box, or using a trail stop rather than take profit. Moving your stop loss to breakeven after the market moves 50% of the way toward your profit target is also another way. There are tons of rules but use or test it first.